We Need to Talk About Banking…

Vasyl Yurchyshyn, Director of Economic Programmes at the Razumkov Centre, analysed the latest developments in Ukraine’s banking system. 

Last week was marked by two events that are likely to have a negative impact on the banking system. The first concerns the adoption of the Law on Restructuring of Foreign Currency Consumer Loans. From the first glance, this event seemed to be highly welcomed, as it would lead to easing of debt pressure for many households. However, this is only one side of the coin. Indeed, first, in the banking sector this situation may mean the formation of imbalances that will need to be normalised. Secondly, and more importantly, there is reason to believe that the decision to restructure was actually made not for economic but for political and populist reasons.

On one hand, it is not the citizens’ fault that the hryvnia value of the borrowed resources has increased significantly due to the devaluation of the national currency. On the other hand, there have already been numerous discussions and warnings regarding the risks associated with foreign currency loans.

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